I began analyzing the financial markets in 1982 when I became the research director for a financial advisory firm and provided regular market analysis on stocks, commodities, currencies and mutual funds. I am a technical analyst. Much of my focus was on how obscure technical indicators or methods, could be applied to the financial markets and used as an effective trading tool. Many of the indicators I have used for years, such as Gerry Appell's MACD and Welles Wilder's RSI, have subsequently gained wide popularity.

This page is devoted to sharing my insights and techniques in order to help you become a smarter trader/investor. Over the past twenty years I have traveled around the world several times, visiting all of the major financial centers as he taught professional traders and money managers my approach to the financial markets.

My method of stock selection starts with a proprietary scanning method to select a group of individual stocks for more extensive analysis. This includes an in-depth study of the volume patterns that I use to determine the strength of a stock's trend. Those with the strongest trend, either up or down, are then further analyzed to determine entry, exit and risk levels. I use Fibonacci retracement, projection and extension analysis to determine both profit objectives as well as stops.

4/20/2012 @ 12:49PM1,022 views

Oil and Gas Event That Bucks the Trend

Contrary to the seasonal tendency, technical signals suggest oil and gas prices may decline, helping the economy and consumers, and two energy ETFs will be especially useful in tracking this trend.

Even though the long-term seasonal tendency is for crude oil to bottom in February and rally through July, this has not been the case in 2012. The June crude oil contract hit a high of $111.31 seven weeks ago and has been declining ever since, which has taken oil to more important chart support. From the early-March highs, the June crude contract has dropped 7.7%.

Lower crude oil prices should be a plus for the economy, and there are also signs that unleaded gas futures have topped out. Though local gas prices are still trading near their highs, the technical action in the unleaded gas futures suggests prices should drop before the summer.

In terms of the energy sector, the relative performance and volume analysis of two key energy sector ETFs identifies some key support levels that should be watched.

Click to Enlarge

Chart Analysis: The weekly chart of the June crude oil futures shows that the weekly uptrend, line a, is now being tested.

A drop below the support at $101.20 to $100.85 will signal a drop to the $100 level and possibly the next major weekly support at $98-$96.50 (line b)

The volume has been heavy over the past two weeks and the weekly on-balance volume (OBV) has broken below support at line c

Daily OBV (not shown) looks better than its weekly counterpart, but the volume was very high on Thursday

On the upside, the three-week resistance at $105.50-$106 should be watched, as a close above this level is needed to stabilize the outlook for crude oil

The July 2012 RBOB New York Harbor Gasoline contract peaked at $3.32 on March 23 and then broke support, line d, in early April.

The break of support has initial downside targets in the $2.98-$3.00 area, which also corresponds to the 38.2% Fibonacci retracement support

The 50% retracement support is at $2.89 while the daily uptrend and 61.8% support is in the $2.79-$2.81 area

Daily OBV formed a negative divergence, line f, which was confirmed by the plunge through support on March 28. This was seven full days before prices broke support

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